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Part one of Alight’s anatomy of ROI blog series
The increasing use of healthcare navigation by benefits leaders raises an important question: How do you measure Return on Investment (ROI) in a way that’s both meaningful and credible?
Organizations seek solutions that promise both long-term success and sustainability. Two key components of this strategy involve ensuring vendor accountability and managing financial risk. Enter the term “ROI guarantee” — a common feature offered by many healthcare navigation solutions, though often accompanied by certain caveats.
Let's delve into the three most common approaches to ROI measurement.
Three key ROI methodologies in the healthcare navigation market
Organizations typically rely on three ROI methodologies to measure outcomes for their healthcare navigation programs. Each approach offers unique advantages and limitations:
1. Total Trend
Total Trend is a method that tracks overall employer cost trends year over year, such as increases or decreases in percentage (e.g., +5%, -2%).
- Pros:
- Simple: This method is straightforward and easy to implement. It doesn't require complex processes or detailed analysis, making it accessible for organizations to use.
- Requires no detailed claims data: Unlike other methods that might need extensive and detailed claims data (such as specific medical procedures, diagnoses, or service dates), this approach can work without such granular information. This simplifies the data collection process and reduces the need for comprehensive data management.
- Works with high-level spend files: Instead of needing detailed claims data, this method can operate using high-level spend files. These files contain aggregated spending information, which is easier to obtain and manage. This makes the method more efficient and less resource intensive.
Healthcare Navigation
This way to better health
Now your people can get the right care and clinical guidance from the start while saving money along the way.
- Cons:
Many influences: There are numerous factors that can affect the costs and outcomes of a program. These influences include plan design, high-cost claimants, and other variables that can impact the overall cost and effectiveness of the program.
Plan design: The way a health plan is structured can significantly affect costs. Different plan designs may offer varying levels of coverage, copayments, deductibles, and other features that can influence the overall cost and utilization of healthcare services.
High-cost claimants: Individuals with high-cost medical conditions or treatments can skew the overall cost analysis. These claimants can have a disproportionate impact on the total costs, making it challenging to isolate the specific impact of a program.
Hard to isolate program impact: Due to the many influences mentioned above, it becomes challenging to isolate the specific impact of a program. The presence of multiple factors can create noise in the data, making it difficult to accurately measure the effectiveness and ROI of the program.
2. Member Matching
Member Matching is sometimes referred to as individual cost comparison; this method compares individual employee costs by comparing them to a similar group of employees, or cohort, using market benchmarks. It relates to a transactional focus — comparing individual employee costs to market benchmarks using CPT codes (such as specific medical procedures).
- Pros:
- Adjusts for market shifts: Flexible and can adapt to significant changes in the market (for example, the impact of the COVID pandemic). It considers how these shifts affect costs and outcomes, ensuring that the analysis remains relevant and accurate even in changing circumstances.
- Compares similar patient conditions: Involves comparing costs and outcomes for patients with similar conditions. By focusing on comparable cases, it provides a more accurate and meaningful analysis of costs and savings. This helps in identifying trends and patterns that might be missed when looking at a broader, less specific dataset.
- Cons:
- Challenges in isolating the impact of multiple programs: When multiple programs are in place, it can be difficult to determine the specific impact of each program. The presence of various initiatives can create complexity in the analysis, making it hard to isolate the effects of individual programs.
- Often includes unrelated, non-impacted claims: This method may include claims that are not directly related to the program being analyzed. These unrelated claims can introduce noise into the data, making it harder to accurately measure the program's impact.
3. Case Experience
Case Experience is a method used to review specific instances or cases where costs have been impacted. It involves analyzing individual cases to identify savings that occur within a diagnostic episode or transactionally at the procedure code level. By examining these cases, organizations can pinpoint areas where they have saved money and understand the factors that contributed to those savings. This method helps in identifying cost-saving opportunities and improving financial efficiency.
- Pros:
- Focusing on full diagnostic treatment episodes rather than transactional data: Looks at the entire treatment process for a patient, rather than just the moment the member reached out. By considering the full diagnostic treatment episode, it provides a more comprehensive view of the patient's care and associated costs.
- Offering client-specific benchmarking: Tailors benchmarks to reflect each client's unique plan design, location, and population. This means that the comparisons are more relevant and accurate for the specific client, leading to better insights and decision-making.
- Ability to allocate impact to different solutions: Enables a comprehensive view of cost efficiency. It helps in understanding which solutions are driving savings and how they contribute to the overall ROI.
- Reducing noise from non-impacted spend: Evaluating only diagnostically relevant claims post-interaction, filtering out irrelevant historical costs. This reduces the noise from non-impacted spend, providing a clearer and more accurate measurement of ROI.
- Cons:
- Newer methodology: As a more recent approach, case-based ROI can require additional explanation for stakeholders unfamiliar with episode-based analysis.
- Timing with ROI program windows: Episodes often span long periods and can cross fiscal or ROI reporting cycles, making timing alignment challenging.
- Requires rigorous data tracking: To produce accurate insights, key data points like diagnosis codes, provider NPIs, and financial data from claims must be captured and monitored.
Why Alight prefers a case-based ROI
Alight’s methodology evolved from Member Matching’s transactional focus (CPT codes vs. benchmarks) to a full diagnostic treatment view. This shift enables the capture of more meaningful savings — especially through participants using better care pathways, such as avoiding unnecessary testing or inappropriate surgeries. The result is a more holistic and accurate measurement of ROI.
The advantages of Case-Based Methodology
- Capturing savings beyond transactions: By focusing on improved care pathways, this approach identifies savings missed by legacy methods.
- Client-specific benchmarks: Tailored benchmarks reflect each client's unique plan design, location, and population.
- Attribution across solutions: Supports allocating savings to various solutions, enabling a comprehensive view of cost efficiency.
- Consistency in application: Case methodology is used for both benchmarks and impacted cases, ensuring fairness.
- Noise reduction: Evaluates only diagnostically relevant claims post-interaction, filtering out irrelevant historical costs.
A clearer ROI narrative for healthcare navigation
Alight’s case-based approach offers a precise and tailored ROI analysis for healthcare navigation. By focusing on impacted claims and accounting for client-specific factors, it provides a clearer attribution of savings across programs while reducing irrelevant data.
This methodology empowers clients to truly understand and maximize the value of their healthcare navigation program — critical for helping partners achieve long-term success and financial sustainability.
Healthcare Navigation
This way to better health
Now your people can get the right care and clinical guidance from the start while saving money along the way.
